76 bt reatnwceheen sSi z&eP iann d9 6M. 3o%o doy f’ s ,t he ev ecna tsheos .u gThh et haeuttwh oo rCs RsAusg ga eg sr et etdh aotn rtahtei nign i tciaatleAr iAnAg bl eeshs afvaivoorrcaobul el dCeRxAp lraei snptohni sd he idg ht odceogmr epeeot if t ai vger eperme sesnutr be ebt yw ae se sni gCnRi An gs , Ai . eA. A, t hc aa pt ti thael beyond their rating model to compete with the other agency’s more favorable initial rating. Bolton et al. (2012) find that competition amongst CRAs in a duopoly po fr ot dh ue cceos ml epsl se xai ct yc uor fa trea treeds uslet cs ut rhi at yn. Ihna vaidndg i tai osni ntgol er, amt i no ng osphoolpy pCi nRgA ,i nr esguabr -dAl eAsAs tranches, He et al. (2016) find rating catering in the AAA tranches. The authors ca og ne nc lcui edse ctaht ae tr erda ttion gC Dc Oo ni vs es ur ge er ns ,cwe hf oo rw9o7u%l d on fo td pu ua rl -crhaat es ed tthr ea nr ca ht iensg smuenalne ss st ht haet Cu nR dAe( rs l)y ai ns gs i ag nCeDdOa. BAeAcAk erra tai nn dg Mt oi lab mo ui rnni m( 2u0m1 1p)e rs ct ue nd yt atghee ocfotmh ep ec tai pt iivt ea l l as tnrduscctaupr ee of CRAs and find that the market presence of Fitch correlates with lower quality rraattiinnggsinfrfoomrmSa&tiPonan. d Moody’s, suggesting that the duopoly produces suboptimal 3.2.2 The impact of complexity in structured finance securities on rating processes Some authors argue that financial institutions may have deliberately introduced cuonmd eprlleyxi int gy lionat on sC (LsOe es, eec.ug r. , i tFya hdaeds i g&n sL at ou roa b, s2c0u1r 7e ) .t hOef tcroouurbsl ee ,s ot hmee i nn cart euar es i nogf ci novme sptl oe rxsi t syi mc ouul tl da nael soou shl ya vi en cbreeeans epda trht eoi fr tahnea lmy tai ct ua rl icnagp ao bf itlhi tei ems , at rhkeeyt ,wbouut l du nhl aevs es had to rely, more and more, on CRAs for analyzing the credit risk of complex products (Arora et al., 2011; Carlin et al., 2013). At the same time, increased cooumt c po lme xei twy oaul sl do bme aakne si ni ct rheaarsde edr l ifkoer l iChRoAo ds toof raas tsiensgs dcirsecdr ietprains kc ys ,. wT hhei c he xipne tcut er nd would stimulate rating shopping; hence, complexity may create opportunities
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